15% urban · 25% rural
Margin money subsidy — General Category
For a new unit, General Category beneficiaries receive margin money subsidy of 15% of the project cost in urban areas and 25% in rural areas.
[2][1]Back to Explore
Prime Minister's Employment Generation Programme (PMEGP)
Loanus Guided
Loanus has organized and summarized information from the official Government sources shown on this page. This is general scheme information, not a personalized eligibility decision.
About this scheme
Prime Minister's Employment Generation Programme (PMEGP)
Any individual above 18 years of age may apply for a new unit. [1][4]
Benefits available under this scheme
25% urban · 35% rural
Margin money subsidy — Special Category
For a new unit, Special Category beneficiaries receive margin money subsidy of 25% of the project cost in urban areas and 35% in rural areas. Special Category includes SC, ST, OBC, Minorities, Women, Ex-Servicemen, Transgenders, Differently abled, NER, Aspirational Districts, and Hill and Border areas (as notified by the Government).
[2][1]₹50 lakh manufacturing · ₹20 lakh business/service
Maximum project cost eligible for subsidy
The maximum project cost admissible for margin money subsidy is ₹50 lakh in the manufacturing sector and ₹20 lakh in the business/service sector. If the total project cost is higher, banks may provide the balance without any Government subsidy.
[1]15% (20% NER/Hill) · up to ₹1 crore project
Second loan for upgrading existing PMEGP/REGP/MUDRA units
This is a separate path for eligible existing PMEGP/REGP/MUDRA units, not for new units. Subsidy is 15% of the project cost (20% in NER and Hill States), with beneficiary contribution of 10%. The maximum project cost admissible for subsidy is ₹1 crore for manufacturing (maximum subsidy ₹15 lakh, or ₹20 lakh in NER and Hill States) and ₹25 lakh for business/service (maximum subsidy ₹3.75 lakh, or ₹5 lakh in NER and Hill States).
[1]Illustrative example
For a ₹10 lakh new-unit project, a General Category urban case at 15% corresponds to ₹1.5 lakh of margin money subsidy, while a Special Category rural case at 35% corresponds to ₹3.5 lakh. The applicable rate depends on category and location. This is an illustration only, not an eligibility or sanction decision. [2][1]
Eligibility
These are general scheme eligibility conditions. They do not confirm whether you personally qualify.
General eligibility
- Any individual above 18 years of age may apply for a new unit. [1][4]
- There is no income ceiling for assistance for setting up projects under PMEGP. [1]
- For projects costing above ₹10 lakh in the manufacturing sector or above ₹5 lakh in the business/service sector, the beneficiary should have passed at least VIII standard. [1]
- New-unit assistance is available only for new projects sanctioned specifically under PMEGP. Existing units (under PMRY, REGP or any other scheme of the Government of India or a State Government), and units that have already availed Government subsidy under any other Government of India or State Government scheme, are not eligible for new-unit assistance. [1]
- Only one person from one family is eligible for financial assistance for setting up projects under PMEGP. Under the revised guidelines, 'family' includes self and spouse. [1]
- Projects without capital expenditure are not eligible for financing under the scheme. [1]
- PMEGP applies to new viable micro enterprises, including Village Industries projects, except activities prohibited by local Government/Authorities and activities in the negative list of the guidelines (para 30). [1]
- Every new unit set up under PMEGP must be registered on the Udyam Portal before physical verification of the unit and adjustment of the margin money in the beneficiary's loan account. [1]
- Entrepreneurship Development Programme (EDP) training is mandatory before the bank releases the loan and for claiming margin money subsidy, except that no EDP training is mandatory for projects up to ₹2 lakh. Training is at least 5 days for projects up to ₹5 lakh and at least 10 days for projects above ₹5 lakh. [2][1]
Documents needed
- Aadhaar number (authenticated with UIDAI); where no Aadhaar has been assigned, the Aadhaar enrolment number, or in certain areas an alternate identification such as PAN Required [1]
- Photograph Required [2][1]
- Project report (Detailed Project Report) Required [2][1]
- Caste certificate — required when claiming eligibility or a benefit based on caste category Optional [2][1]
- Special Category certificate — required wherever applicable Optional [1]
- Rural area certificate — required where applicable to establish the unit's rural-area classification Optional [2][1]
- Education / EDP / Skill Development certificate — required where the applicable education or training condition must be proved Optional [2][1]
How to apply
- 1
- 2
- 3
Upload documents and make the final submission
On the PMEGP portal, upload the required documents; a self-assessed score is generated from the details entered. On final submission you receive a unique Application ID for tracking, and the application is forwarded electronically to your chosen Implementing Agency.
[1][3] - 4
Scrutiny by the Implementing Agency
Within five working days the nodal officer of the Implementing Agency contacts the applicant for preliminary scrutiny. Applications are forwarded to the bank if they meet the minimum score (50 out of 100 for projects up to ₹10 lakh; 60 out of 100 above ₹10 lakh), and no later than three weeks after the final application is received.
[1] - 5
Bank appraisal and loan decision
The bank appraises the project and takes its own credit decision. Banks sanction or reject within 30 days of receiving the application from the district agency, and the sanction is issued online.
[1] - 6
Complete EDP training and deposit your own contribution
EDP training can be taken any time after the application is submitted. Within 30 working days of being told the loan is sanctioned, deposit your own contribution and a copy of the EDP training certificate (with photo and Aadhaar number) with the financing bank.
[2][1] - 7
Margin money held for the 3-year lock-in, then adjusted
After the bank releases the first instalment, the margin money subsidy is kept in a Term Deposit Receipt / Subsidy Reserve Fund in the beneficiary's name for three years, with no interest paid on it and no interest charged on the corresponding loan amount. It is adjusted in the loan account after the 3-year lock-in, based on a positive physical verification report.
[1]
Application deadline
No deadline is stated in the sources Loanus currently holds.
Important things to know
A few practical scheme details that may matter while you plan or apply.
- The beneficiary's own contribution for a new unit is 10% of the project cost for General Category and 5% for Special Category. [2][1]
- The bank sanctions 90% of the project cost for General Category and 95% for Special Category beneficiaries, as a term loan and/or working capital, or a composite loan. [1]
- Working capital should not exceed 40% of the project cost for manufacturing units and 60% for service/trading units. [1]
- The cost of land should not be included in the project cost. The cost of a ready-built shed or a long-lease or rental workshed/workshop may be included, calculated for a maximum period of 3 years only. [1]
- The revised guidelines state that, in line with RBI guidelines, banks will not insist on collateral security for projects involving loans up to ₹10 lakh that are forwarded to them by the agencies. [1]
- Normal bank interest applies. Repayment may range from 3 to 7 years after an initial moratorium, as prescribed by the bank. [1]
- Capital expenditure per full-time worker employed by the project should not exceed ₹3 lakh in plain areas and ₹4.50 lakh in hilly areas. [1]
- Projects financed jointly from two different banks or financial institutions are not eligible for margin money subsidy. [2][1]
- Margin money subsidy is one-time assistance. It is not available for enhancing credit limits or for expansion/modernisation, except for units selected for upgradation through the second loan under the scheme. [1]
- Applicants who have already completed at least 10 days (offline) or 60 hours (online) of EDP, SDP, ESDP or vocational training need not undergo EDP training again. KVIC has also developed a free 2-day online EDP module for prospective entrepreneurs. [1]
- Business/trading sales outlets are permitted only in specified cases (for example NER, LWE-affected districts and A&N Islands, or outlets selling KVIC-certified Khadi/Village Industry products or PMEGP/SFURTI products), with a maximum project cost of ₹20 lakh. Transport activities for tourists or the general public are allowed, subject to a 10% ceiling outside specified areas. [1]
- The negative list excludes, among others: businesses connected with slaughtered meat; intoxicants such as beedi, pan, cigars and cigarettes; hotels, dhabas or outlets serving liquor; tobacco preparation; toddy tapping for sale; polythene carry bags under 75 microns and certain recycled-plastic food containers; and crop cultivation/plantation. Value addition, and certain animal-husbandry activities (dairy, poultry, aquaculture, insects including bees and sericulture), are allowed. [1]
- Second-loan (upgradation) eligibility is separate from new-unit eligibility: the margin money under PMEGP must have been adjusted after the 3-year lock-in, the first PMEGP/REGP/MUDRA loan must have been repaid on time, and the unit must be profit-making with good turnover and growth potential. [1]
- KVIC is the single nodal agency at the national level. In the States, the scheme is implemented through State offices of KVIC, State Khadi and Village Industries Boards (KVIBs), District Industries Centres (DICs), the Coir Board (for coir-related activities) and banks. [2][1]
Sources
- [1]Office Memorandum No: PMEGP/UdhyamReg./01/2023, Dated 07.12.2023 — Approval for modifications in PMEGP guidelines making Udyam Registration mandatory for PMEGP units - reg
English · 30 Sept 2026
Open official link - [2]Faq_PMEGP.pdf
English · 30 Sept 2026
- [3]User Manual for PMEGP Portal
English · 30 Sept 2026
- [4]Eligibility Conditions of Beneficiaries
English · 30 Sept 2026